Over the past two years, the UK property market has gone above and beyond expectations. With record-breaking property prices and a strong rental market, more investors are starting – or building – their portfolio with buy-to-let property.
Regardless of whether you’re a seasoned investor or it’s your first investment asset, the rules for buy-to-let property are simple: focus on the location and think about the future. While considering the current market is important, property investment is usually most lucrative on a long-term basis.
But what makes a buy-to-let hotspot? Aside from property prices and rental yields, investors should be considering tenant demand, transport links and employment opportunities, as well as regeneration and population growth.
Knowing what to look for is one thing, but knowing where to find these is another. Joseph Mews, a leading UK property investment company, has identified some of the best places to invest in 2022:
Birmingham
Birmingham has long been a dark horse in the world of buy-to-let property and 2022 is no exception. As the UK’s second city, this Midlands powerhouse has all the characteristics of a lucrative investment location – tenant demand, regeneration and transport links, to name a few.
In preparation for the 2022 Commonwealth Games, the city is undergoing extensive regeneration to prepare for the global spectacle. The Games will only increase the profile of Birmingham, and is expected to contribute to the city’s growing population, along with the ongoing work for HS2 Curzon Street.
Pushing the population to 1.24 million by 2030, it’s no surprise that Birmingham is one of the best places to invest in UK property in 2022. With an average rental yield of 6.56% and up to 24.5% price growth forecasted by 2026, unique developments, such as Lockside Wharf, are prime investments for the new year.
Derby
In the West Midlands, you have Birmingham and in the East Midlands, you’ll find Derby. With an unrivalled manufacturing industry that can be traced back to the industrial era, Derby’s ever-expanding population continues to be driven by its unrivalled employment opportunities.
Housing the likes of Rolls Royce, Bombardier Transportation and Toyota, Derby is made up of around 35,000 students and undergraduates – also known as ‘Generation Rent’. While this variety in job offerings is a key incentive for younger workers, the high wages and low living costs are even more attractive.
Boasting the 7th highest wage in the UK and one-bed apartments for just £530 a month, Derby is becoming more popular amongst tenants and investors. While property prices across the city have increased by more than 30% in the last 10 years, it remains one of the most affordable locations in the UK – putting the average rental yield at 4.20%.
This has helped position Derby as one of the most exciting investment locations in the UK because of the affordability and returns it can offer buy-to-let investors. In turn, developments such as The Pavilion represent exciting opportunities to take advantage of this forecasted growth going forward.
Manchester
It will come as no surprise that Manchester continues to rank as one of the best places to invest in UK property in 2022. While the average age of the city’s population is somewhat older than that of Birmingham and Derby, its rental market remains one of the strongest in the UK.
There are many reasons why tenants – and investors – choose Manchester, the main one being its strong foundation of regeneration projects and employment opportunities. Manchester’s renowned MediaCity has long been a key contributor to the local economy, with 10,000 jobs created over the last 10 years in the BBC’s move to Salford.
Student property is also a compelling option for those interested in Manchester property investment – with higher rental yields and lower average house prices than residential property.
With over 100,000 students in Greater Manchester – and a large chunk based in the city of Manchester – the region is a fantastic option for both residential and student property alike.
Home to some of the best universities in the country and considered an international centre of industry, the city is a top choice for many buy-to-let investors – thanks to the many jobs available in the city and skyrocketing property values.
Property prices in the city have long benefitted from an expanding economy, which is only set to continue in the coming years. With up to 24% growth forecasted by 2026, Manchester continues to rival the Midlands for buy-to-let property.
Newcastle
Newcastle will always be one of the most affordable locations in the UK, making its low entry points even more appealing to investors.
Although the average property price stands at just £177,000, the increasing demand for property has long bolstered rental yields across Newcastle. By population, the city is the 8th largest in the UK, pushing the average rental yield as high as 5.23%.
There’s no question surrounding Newcastle’s attractive property prices and strong population, but when it comes to capital growth, the city has long lagged behind. In the past five years, prices in Newcastle have increased by 12.4% and while there are up to 13.5% increases on the horizon, investors can often find more promising growth in the Midlands.
Leeds
Leeds has established itself as Yorkshire’s economic powerhouse, which has inevitably seen it become one of the best places to invest in UK property in 2022. With the second-largest banking and finance sector in the country, this has long been at the root of Leeds’ appeal amongst young professionals and investors.
According to the latest reports, Leeds boasts an 800,000 strong population, 73% of whom are thought to be in rented property. This has made Leeds a serious contender for those looking for consistent, long-term tenant demand.
Investing your hard-earned money is a big commitment, but there’s rarely anything more stable than bricks and mortar. The UK market continues to go from strength to strength, and with prices continuing on an upward trajectory, many UK locations are emerging as buy-to-let hotspots for 2022. Characterised by rising property prices, consistent demand and a wealth of employment opportunities, investors now have a wealth of locations to choose from.
